The shareholder contract should define the procedure for adding or withdrawing shareholders. – the continued application of the agreement to the third-party buyer after the purchase; The shareholder contract should determine what happens when a shareholder dies or becomes insolvent, disabled or retires. Does any of these events trigger the sale of the shares? The shareholders` pact should notify him. While there is often a direct attraction to clients about the simplicity and appearance of the fairness of the shotgun, the question of whether a shotgun is appropriate in a particular agreement should be in the mind of the lawyer in the first place. If the parties are 50/50 and under similar financial conditions (both in terms of resources and liquidity), this can work well. But if the parties are of unequal strength or have unequal interests (so the total dollar effort could be more than two, three or more than the other), or if the parties have identical but different talents to contribute, or if you have certain skills or knowledge necessary for the success of the business, this may not be appropriate. If so, risks and uncertainties are very often used to encourage resolution and thus avoid its use. Note that the rifle can easily be used by a majority to crush the minority. Two different approaches are available for the development of control provisions.
In general, these issues are subject to provincial approval or approval of directors (by decision or other means) of shareholders or by votes or both. Appendix “A” is an example of the approval or approval approach to control such problems. The second approach takes into account specific issues within the directors` competence and leaves them exclusively to shareholders. Appendix “B” is an example of the type of distance from the control mechanism. PandaTip: This can be a common topic for shareholder disputes, everyone thinks the other doesn`t work hard enough, always overpaid, etc. The use of detailed employment contracts or the placement of these conditions here can help defuse future disputes. SR has the advantage of not interfering with the commercialization of shares as in the case of an HR, but of leaving much less security for other shareholders, especially with regard to the identity of future shareholders. It also has a certain degree of dispute resolution, particularly in the area of withdrawal, to the extent that a disgruntled party can allow the company to leave.